Forex Market: USD/BRL daily trading outlook

Yesterday’s trade saw USD/BRL within the range of 2.2905 – 2.2742. The pair closed at 2.2883, gaining 0.46% on a daily basis.

At 12:51 GMT today USD/BRL was down 0.36% for the day to trade at 2.2798, having shifted in a daily range between 2.2788 and 2.2883.

Fundamental view

United States

Durable goods orders in the United States rose by a record 22.6% in July amid surging bookings for commercial aircraft after an air show in the U.K. in the same month. Junes reading received an upward revision to show a 2.7% growth. The all-time record surge was due to a 318% jump in airplanes orders. Automobile orders also added to the upbeat reading, as demand for autos rose by the most since August 2009.

Durable goods orders, as an indicator, gauge the strength of US manufacturing sector and represent a major portion of nation’s Factory Orders. This is a closely watched report on manufacturing activity, because durable goods are the first type of goods to be affected by an economic downturn or upturn.

However, durable goods orders, which exclude transportation items, fell by 0.8% in July, following the previous month’s upward-revised 3.0% jump. Large ticket orders, such as automobiles for civil use or aircraft, are not present in the calculation due to their volatility. This way the index provides a more reliable information in regard to orders of durable goods.

Non-military durable goods orders excluding aircraft, considered as a proxy for future business investment, slid by 0.5%, compared to the previous months upward revised 5.4% gain.

Later in the day Standard & Poor’s will release its S&P/Case-Shiller House Price Index, which measures the change in prices of single-family homes in 20 metropolitan areas across the US. The report serves as a gauge of the US housing market’s health. According to preliminary estimates, the respective homes’ price probably rose by 1.0% on a monthly basis in June, compared to 1.1% a month earlier, while marking an 8.4% jump on an annual basis, down from the previous period’s 9.3% rise.

Also due on Tuesday, at 14:00 GMT, is the Conference Board’s August US consumer confidence index. According to preliminary estimates, CB will report that consumer confidence fell in August, with its index dropping to 89.0 from 90.9 in July. The report measures the level of individuals’ confidence in the US economic activity. It is considered as a leading indicator as it gives an early insight into consumer spending, which accounts for most of GDP. Thus, higher consumer confidence is generally seen as bullish for the US dollar, while worsening sentiment is regarded as bearish.

Brazil

Brazils Instituto Brasileiro de Geografia e Estatisticais will release its Bank Lending report at 13:30 GMT. The indicator measures the total value of outstanding loans granted to businesses or individuals. It is a category closely tied to consumer confidence as it reflects individuals and entities borrowing needs and appetite. Thus, an economy faring well, which is characterized by strong consumer confidence and spending, will generally also see expanding bank lending (until inflation accelerates to a point when the central bank switches to a hawkish tone), and vice versa. The reading is calculated on a monthly basis.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 2.2843. In case USD/BRL manages to breach the first resistance level at 2.2945, it will probably continue up to test 2.3006. In case the second key resistance is broken, the pair will probably attempt to advance to 2.3108.

If USD/BRL manages to breach the first key support at 2.2782, it will probably continue to slide and test 2.2680. With this second key support broken, movement to the downside will probably continue to 2.2619.

The mid-Pivot levels for today are as follows: M1 – 2.2650, M2 – 2.2731, M3 – 2.2813, M4 – 2.2894, M5 – 2.2976, M6 – 2.3057.

In weekly terms, the central pivot point is at 2.2692. The three key resistance levels are as follows: R1 – 2.2925, R2 – 2.3071, R3 – 2.3304. The three key support levels are: S1 – 2.2546, S2 – 2.2313, S3 – 2.2167.